Cutting jobs or retaining talent?

by: HDA

Difficult decisions must be made to ensure the continued success of the business and leaders face the conundrum of whether to reduce staff numbers or retain talent.

It is likely that at some point in a senior manager’s career they will be faced with the prospect of leading during challenging times. For many organisations, now appears to be one of those times - where budgets are frozen; profits are declining; and staff are concerned about the future. Difficult decisions must be made to ensure the continued success of the business and leaders face the conundrum of whether to reduce staff numbers or retain talent.

According to the CIPD (2009) organisations planning to reduce workforce numbers can expect to incur expenses of £16,375 for every redundancy and this figure is likely to be a conservative estimate not including related expenses such as reduced productivity. Up until 2008, organisations rationalizing their businesses were increasingly beginning to recognise that re-deploying those with partially or fully transferable skills was a favourable alternative to redundancy and re-hiring, from cost, re-training and staff morale perspectives. However, in the current climate redeployment might not always be as feasible as it was in previous years, so organisations need to think more creatively in order to retain talent, for example by introducing flexible working options, recruitment freezes, secondments to other organisations, reduction in working hours, cutting bonuses, sabbaticals, career breaks, or job sharing.

In choosing to retain talent, not only are leaders perceived, by staff, as possessing a full understanding of the key skills that exist within the business but the image of the organisation as a caring, employer of choice is also reinforced.

Managing redundancies at scale and often at speed requires significant amounts of dedicated time from senior managers and HR. This combined with lowered staff morale and reduced staff numbers makes it increasingly difficult to maintain business performance during this time. Although there are certain steps that can be taken to facilitate the process and ensure it goes as smoothly as possible, even for experienced leaders the process is a daunting, time-consuming one that is fraught with complexities.

When under pressure the impulse can be to opt for redundancies as a quick fix to short term financial difficulties. However, organisations with a longer-term outlook recognise that, introducing strategies to retain key talent; can be a more effective approach to ensuring long term business continuity.